Geopolitical Risk Gives BAE Systems a Lift.

"BAE Systems has been a top beneficiary alongside other European arms manufacturers from the West's drive to arm Ukraine, and looks set to continue doing so as governments spend more on military equipment.

Members of the North Atlantic Treaty Organization have been shipping tanks, rocket launchers, air defenses, ammunition and other military equipment to Ukraine, and are now seeking to replenish their stockpiles through orders with defense manufactures.

Some of its military equipment, such as the M777 howitzer, has been widely used by Kyiv forces and, this year, Ukraine received Bradley fighting vehicles as well as Challenger 2 tanks.

BAE Systems said on Monday that it expects to report another year of robust sales and earnings growth on the back of heightened geopolitical risks.

Its shares rose as high as 1,116 pence each in early trade, up from the roughly 600 pence in the days prior to events in  Ukraine in February 2022, giving it a current market value of about GBP 33.65 billion, or about $41.14 billion, according to FactSet. The shares settled at 1,108 pence each, and are up nearly 30% since January.

The U.K. defense-and-aerospace group said order flow on both new and existing programs remains strong, underpinning expectations for good top-line growth in the coming years. Most major defense programs were long term in the build and support phases, and as a result of this the contracts it secures now will be executed over many years, it said.

So far this year, the company has booked over GBP 30 billion in orders, including around $800 million for Bradley fighting vehicles used by the U.S. Army as well as upgrades.

Orders also include around $500 million for the Archer artillery system from Sweden, and $797 million to start full-rate production of the armored multipurpose vehicle -- which includes prior funding for early order materials -- for the U.S. Army. It makes a range of military hardware and software, mainly in the U.S. and U.K.

Like German peer Rheinmetall, BAE also backed its guidance for 2023. It expects sales this year to be 5% to 7% higher than the GBP 23.26 billion reported in 2022. Underlying earnings before interest and taxes -- the company's preferred profitability metric -- are seen 6% and 8% higher than the GBP 2.48 billion achieved a year earlier. Free cash flow is seen at more than GBP 1.8 billion from GBP 1.95 billion in 2022.

Rheinmetall, meanwhile, targets sales in the range of 7.4 billion euros to 7.6 billion euros, or about $7.91 billion to $8.12 billion, up at least 1 billion euros from a year earlier." [1]

Most of this kit is just expensive shit in face of cheap Chinese drones. It did not work for Mr. Zelensky and his associates. 

1. Geopolitical Risk Gives BAE Systems a Lift. Goriainoff, Anthony O; Orru, Mauro.  Wall Street Journal, Eastern edition; New York, N.Y.. 14 Nov 2023: B.3.